The fiscal benefits of stringent climate change mitigation: an overview

Date: 04 December 2017

The Paris Agreement’s very ambitious mitigation goals, notably to ‘pursue efforts’ to limit warming to 1.5°C, imply that climate policy will remain a national affair for some time. One key obstacle to very ambitious national mitigation is that some policy makers perceive this to be in competition with major goals of fiscal policy, such as public investment or debt reduction. However, climate policy may actually contribute to these other objectives. Importantly, many fiscal implications of substantial carbon prices, which are essential for stringent mitigation targets such as the 1.5°C goal, have long been neglected by economic analyses of climate change mitigation.
We systematically review recent contributions on interactions between climate policy and public finance, which include many topics beyond the classic `double dividend’ of environmental tax swaps.